Indonesia Considers Buying Russian Oil, Wary of US Sanctions

TheIndonesia.co - Indonesian President Joko Widodo is considering joining India and China in buying Russian oil to offset increasing pressure from rising energy costs, the Financial Times reported on Monday. Any move to buy Russian crude at a price above the limit agreed by the G7 countries could subject Indonesia to US sanctions.

"We always monitor all options. If there are countries (and) they provide better prices, of course," Widodo said in an interview with the Financial Times, when asked whether

Indonesia would buy oil from Russia, as reported by Antara again. Earlier this month, Jokowi raised the price of subsidized fuel by 30 percent and said a price hike was his "last option" due to fiscal pressure, sparking protests across the nation of 270 million people.

In August, Tourism Minister Sandiaga Uno said that Indonesia had been offered Russian crude oil at a 30 percent discount. Following that, state-owned oil company Pertamina said it was reviewing the risks of buying Russian oil.

Raising Oil Price

Southeast Asia's largest economy, Indonesia posted an annual inflation rate of 4.69 percent in August, above the central bank's target range of 2-4 percent for the third straight month, due to high food prices. The price of fuel oil may potentially decrease, depending on the price dynamic on the global stage, Minister of Energy and Mineral Resources, Arifin Tasrif, said at Ayama MidPlaza Hotel here on Friday.

If the global situation improves, then the price of domestic fuel oil will fall, he added. In the meantime, he urged people to be frugal in their energy consumption to control fuel oil volume and also reduce air pollution.
"If you used to consume three liters of fuel, try to only consume two liters. This is also to reduce CO2 air pollution," he said.

Speaking about the plan to restrict subsidized fuel oil purchases, Tasrif informed that it is still being discussed and delved into by the government.

The plan is being discussed since there are several options. Moreover, since there are many considerations, the government will need to do some research on this, he explained.

The government has decided to raise fuel oil prices because the Indonesia Crude Price (ICP) at the global level has been rising along with people's consumption, he said.

At first, the government allocated Rp502.4 trillion to subsidize fuel oil prices based on the assumption that the consumption of diesel would be 15 million kiloliters and Pertalite 23 million kiloliters until the end of the year.

However, people's consumption increased amid the rising ICP, with the estimated volume of diesel consumption until the end of the year pegged at 17 million kiloliters and Pertalite at 29 million kiloliters.

Therefore, the government raised the fuel oil price considering that the state budget would be under heavy pressure if the energy subsidy allocation is increased from Rp502.4 trillion to almost Rp700 trillion.
Despite this, the government has continued to support the people's purchasing power by reallocating Rp24.17 trillion from the budget that was supposed to be used for energy subsidies for providing social aid.